1
Bradwich plc is a medium-sized engineering company whose shares are listed on a major
Stock Exchange.
It has recently applied to its bankers for a 7-year loan of £500,000 to finance a modernisation
and expansion programme.
Mr Whitehall, a recently retired civil servant, is contemplating investing £10,000 of his lump sum
pension in the company’s ordinary shares in order to provide both an income during his retirement
and a legacy to his grandchildren after his death.
The bank and Mr Whitehall have each acquired copies of the company’s most recent annual
report and accounts.
Required:
(a) State, separately for each of the two parties, those aspects of the company’s performance
and financial position which would be of particular interest and relevance to their respective
interests.
(b) State, separately for each of the two parties, the formula of four ratios which would assist in
measuring or assessing the matters raised in your answer to (a).
(Association of Chartered Certified Accountants)